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SOCIAL MEDIA AND MARKETING:
EXPLORING THE LEGAL PITFALLS OF USERGENERATED CONTENT
Brian D. Wright, Esq.1
I. INTRODUCTION AND SUMMARY............................................................... 67
II. LEGAL STANDARDS AND GENERAL ADVERTISING PRINCIPLES
APPLICABLE TO C2C OR SOCIAL MEDIA MARKETING ................................ 68
A. Section 5 of the Federal Trade Commission Act, “Mini-FTC Acts”
and Other Consumer Protection Statutes ................................................ 68
B. False Advertising Under the Lanham Act .......................................... 74
III. FTC GUIDELINES CONCERNING THE USE OF ENDORSEMENTS AND
TESTIMONIALS IN ADVERTISING.................................................................. 77
IV. CONCLUSION ......................................................................................... 85
I. INTRODUCTION AND SUMMARY
The goal of advertising has always been to deliver a marketing
message that connects with customers. For years, advertisers used a
conventional model of informing, persuading, and reminding groups of
customers using non-personal presentations delivered by the advertiser in a
paid form from an easily identifiable sponsor.2 While there have been
historically well-known and controversial breaks from this conventional
advertising model (e.g., Reese's Pieces® in E.T. and Ray-Ban® in Risky
Business3), advertisers traditionally controlled the content, frequency,
timing, and medium of the advertising message and were easily identified as
the advertising sponsor.4 However, the cheap availability and the direct
1
Mr. Wright is an attorney in the Cincinnati, Ohio office of the law firm of Faruki Ireland & Cox
P.L.L. ("FI&C"). FI&C is a mid-sized law firm with a national complex business litigation trial practice.
FI&C handles commercial disputes of all types, including class actions, intellectual property (e.g., patent,
copyright, trademark and trade secrets), antitrust, securities, false advertising, employment and
discrimination, and product liability cases. This article represents the opinions of the author and not
necessarily the opinions of FI&C or its clients.
2
Jef I. Richards & Catharine M. Curran, Oracles on "Advertising": Searching for a Definition, 31 J.
OF ADVERTISING 63, 63-77 (2002) (summarizing the various definitions of advertising). “Advertising is
a paid, mediated form of communication from an identifiable source, designed to persuade the receiver to
take some action, now or in the future.” Id. at 74.
3
E.T.: THE EXTRA TERRESTRIAL (Universal Pictures 1982) (protagonist Elliot enjoyed Reese's
Pieces with E.T.); RISKY BUSINESS (The Geffen Company 1983) (Tom Cruise wore Ray-Ban
sunglasses).
4
See W. Glynn Mangold & David J. Faulds, Social Media: The New Hybrid Element of the
Promotion Mix, 52 BUS. HORIZONS 357, 359 (2009) (“In the traditional communications paradigm, the
elements of the promotional mix are coordinated to develop an IMC [(Integrated Marketing
Communication)] strategy, and the content, frequency, timing, and medium of communications are
dictated by the organization in collaboration with its paid agents (advertising agencies, marketing
research firms, and public relations consultants).”).
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connectivity of social media (and its rapidly increasing use) have changed
the conventional model and turned it on its head,5 creating interesting and
often difficult issues for lawyers practicing in advertising law.
With the increasing popularity of social media websites and usergenerated content-based features, there has been a paradigm shift in the way
advertisers communicate with customers.6 Under the conventional model,
advertising messages were controlled and disseminated by the advertiser or
the agent of the advertiser (e.g., advertising agencies and public relations
consultants).7 Now, under what has become known in the industry as
consumer-to-consumer (“C2C”) or consumer-generated media (“CGM”)
marketing,8 advertising messages are often encouraged (and even
developed) by the advertiser or agent, but then controlled and disseminated
by the consumer.9 There is little question that websites like Twitter,
Facebook, MySpace, and LinkedIn have become an important route for
providing C2C or CGM advertising messages, and advertisers are quickly
moving to utilize social media marketing strategies.10 The viral nature of
social media can make marketing strategies that employ this new method of
If social media marketing
communication extremely successful.11
campaigns are implemented improperly, however, then such marketing
strategies can be filled with legal (and brand) risks.
II. LEGAL STANDARDS AND GENERAL ADVERTISING PRINCIPLES
APPLICABLE TO C2C OR SOCIAL MEDIA MARKETING
A. Section 5 of the Federal Trade Commission Act, “Mini-FTC Acts” and
Other Consumer Protection Statutes
Advertising has long been governed by both federal and state law.12
5
Id. at 358-60.
Id. at 359-61.
7
Id.
8
PETE BLACKSHAW, SATISFIED CUSTOMERS TELL THREE FRIENDS, ANGRY CUSTOMERS TELL
3,000: RUNNING A BUSINESS IN TODAY'S CONSUMER-DRIVEN WORLD 3 (2008). The use of social
networking websites and consumer-to-consumer advertising messages has also been called “‘integrated
marketing communication’ ([or] IMC).” Ellen P. Goodman, Peer Promotions and False Advertising
Law, 58 S.C. L. REV. 683, 686 (2007).
9
Mangold & Faulds, supra note 4, at 357-58 (“This form of media ‘describes a variety of new
sources of online information that are created, initiated, circulated and used by consumers intent on
educating each other about products, brands, services, personalities, and issues.’”).
10
Brian Womack, Social Networking and Games Leap in Web Use, BLOOMBERG BUS. WEEK (Aug.
2, 2010, 12:01 AM), http://www.businessweek.com/technology/content/aug2010/tc2010081_
994774.htm; Andy Beal, If Time is Money, Spend Your Advertising Dollars on Social Networks!,
MARKETING PILGRIM (Aug. 2, 2010), http://www.marketingpilgrim.com/2010/08/if-time-is-moneyspend-your-advertising-dollars-on-social-networks.html.
11
Emily Glazer, Social Media Initiatives Drive Sales, Product Development, DOW JONES
NEWSWIRES
(July 27,
2010),
http://www.nasdaq.com/aspx/company-news-story.aspx?storyid=
201007271104dowjonesdjonline000322.
12
Both state and federal law overlap to govern advertising. Under federal law, most advertising is
governed by Section 5 of the Federal Trade Commission Act which states generally that advertising must
be truthful and non-deceptive, have evidence to substantiate claims, and cannot be unfair. 15 U.S.C. § 45
6
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Legal standards that expressly address C2C or CGM marketing are in their
infancy, and new laws and regulations are in the process of rapidly catching
up to the realities and needs of this new form of media.13 Importantly,
advertisers using social media must comply with the same existing
advertising legislation and regulation that is used to police advertisers who
use the conventional model.14 Regulations propounded by and enforcement
actions brought by the Federal Trade Commission (the “FTC”) provide a
minimum starting point.15 Decisions from courts in cases involving
consumer protection statutes also provide guidance by which advertising
may be reviewed.16 It is through the magnifying glass of these regulatory
activities and court decisions that the new advertising must be considered
because these laws will be used to judge the advertising.
Most advertising regulations and state consumer protection laws
have their genesis in section five of the Federal Trade Commission Act (the
“FTC Act”).17 Section five of the FTC Act states, in part, that “[u]nfair
methods of competition in or affecting commerce, and unfair or deceptive
acts or practices in or affecting commerce, are hereby declared unlawful.”18
While the FTC Act does not provide for a private cause of action to
individual plaintiffs,19 the FTC has authority under the FTC Act to both
(2006). Depending on the service or product being advertised, other federal regulations and laws may
need to be considered to ensure that social media marketing strategies do not run afoul of the law. For
example, companies that make or market U.S. Food & Drug Administration-regulated products have
additional regulations that must be adhered to and considered when using social media marketing
strategies. Additionally, every state has consumer protection laws that govern ads running in that state.
See SEARLE CIVIL JUSTICE INST., STATE CONSUMER PROTECTION ACTS: AN EMPIRICAL INVESTIGATION
OF PRIVATE LITIGATION vii (2009) (analysis of state consumer protection laws and comparison with FTC
enforcement). Finally, self-regulatory decisions from the National Advertising Division also provide
guidance to advertisers seeking to present truthful and non-deceptive advertising. See NAT’L ADVER.
DIV., http://www.nadreview.org (last visited Nov. 19, 2010).
13
Statements about products or services occur all of the time without the involvement of an
advertiser. Comment postings, product review blogs, and videos on sharing websites like YouTube are
littered with thousands of examples of consumers detailing the benefits (and shortcomings) of products
independent of any involvement from the producer of the product or provider of the service. Advertising
law and regulations govern commercial speech and not non-commercial statements made by persons
independent of the marketer. In other words, if the marketer is not involved in the speech, then the
speech is not commercial speech subject to advertising law and regulation. See, e.g., Wojnarowicz v.
Am. Family Ass’n, 745 F. Supp. 130, 141-42 (S.D.N.Y. 1990) (holding that section 43(a) of the Lanham
Act did not apply to artwork in a pamphlet that was critical of public funding of the arts, stating that the
Lanham Act “has never been applied to stifle criticism of the goods or services of another by one, such as
a consumer advocate, who is not engaged in marketing or promoting a competitive product or service.”).
14
See, e.g., FTC, ADVERTISING AND MARKETING ON THE INTERNET: RULES OF THE ROAD (2000),
available at http://www.ftc.gov/bcp/edu/pubs/business/ecommerce/bus28.pdf.
15
15 U.S.C. § 45 (allowing the FTC to propound regulations and bring enforcement actions to
prevent unfair methods of competition).
16
See supra note 12.
17
15 U.S.C. § 45.
18
Id. § 45(a)(1).
19
St. Martin v. KFC Corp., 935 F. Supp. 898, 907 (W.D. Ky. 1996) (citing Holloway v. BristolMyers Corp., 485 F.2d 986, 988-89 (D.C. Cir. 1973) (finding no implied private right of action under
FTC Act)).
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propound regulations and to initiate investigations or enforcement actions.20
Under its Section 5 authority, the FTC also issues guidelines or
administrative interpretations that are intended to provide guidance about
compliance with the law.21 These guidelines do not have the force of law
and are not formal regulations issued by the FTC, and there are no direct
fines issued for violations of the guidelines; however, violations of the
guidelines likely will be viewed as violations of section 5 of the FTC Act
and could result in an enforcement action.22
While the FTC has issued guidelines and policy statements in a
number of different areas of advertising law (the “Guidelines Concerning
the Use of Endorsements and Testimonials in Advertising” [hereinafter
Endorsements and Testimonial Guidelines] are discussed in more detail in
Section III below), together they convey a number of separate and very
basic advertising principles, including:
(1) a representation, omission, or practice is deceptive if it is
likely to mislead consumers and affect consumers’ behavior
or decisions about the product or service;23
(2) a claim can be misleading if relevant information is
withheld or if the claim implies something that is false;24
(3) claims must be substantiated, especially when the claims
concern health, safety, or performance;25
(4) third parties—such as advertising agencies or website
designers and catalog marketers—also may be liable for
disseminating deceptive claims if they participate in the
preparation or distribution of the advertising, or know about
20
15 U.S.C. § 45. As an example, through its regulatory authority under the FTC Act, the FTC has
issued its Policy Statement Regarding Advertising Substantiation, which requires that advertisers must
have substantiation for advertising claims before the advertiser uses the claim in marketing materials.
FTC POLICY STATEMENT REGARDING ADVERTISING SUBSTANTIATION, reprinted in In re Thompson
Med. Co., 104 F.T.C. 648 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986).
21
See Guides Concerning Use of Endorsements and Testimonials in Advertising, 16 C.F.R. §
255.0(a) (2010).
22
Id. (“The Guides in this part represent administrative interpretations of laws enforced by the
Federal Trade Commission for the guidance of the public in conducting its affairs in conformity with
legal requirements. Specifically, the Guides address the application of Section 5 of the FTC Act (15
U.S.C. 45) to the use of endorsements and testimonials in advertising. The Guides provide the basis for
voluntary compliance with the law by advertisers and endorsers. Practices inconsistent with these Guides
may result in corrective action by the Commission under Section 5 if, after investigation, the
Commission has reason to believe that the practices fall within the scope of conduct declared unlawful by
the statute.”).
23
FTC POLICY STATEMENT ON DECEPTION, reprinted in In re Cliffdale Assocs., Inc., 103 F.T.C.
110, 171 (1984) (“[T]he Commission will find deception if there is a representation, omission or practice
that is likely to mislead the consumer acting reasonably in the circumstances, to the consumer’s
detriment.”).
24
Id. at 174.
25
POLICY STATEMENT REGARDING ADVERTISING SUBSTANTIATION, reprinted in In re Thompson
Med. Co., 104 F.T.C. 648 (1984), aff'd, 791 F.2d 189 (D.C. Cir. 1986).
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the deceptive claims prior to its distribution;26 and
(5) disclaimers and disclosures must be clear and
conspicuous, but a disclaimer or disclosure alone usually is
not enough to remedy an otherwise false or deceptive
claim.27
In addition to compliance with the FTC Act, most states have
statutes that are modeled after the FTC Act and many of these “mini-FTC
Acts” provide for a private cause of action to individual plaintiffs (or even
allow plaintiffs to bring private attorney general actions).28 For example,
Ohio’s Consumer Sales Practices Act prohibits unfair or deceptive sales
practices in consumer transactions and is commonly used by plaintiffs to
bring lawsuits to remedy allegedly false and misleading advertising.29
Ohio’s Consumer Sales Practices Act declares the conduct below, among
other things, to be deceptive:
(1) That the subject of a consumer transaction has
sponsorship, approval, performance characteristics,
accessories, uses, or benefits that it does not have;
(2) That the subject of a consumer transaction is of a
particular standard, quality, grade, style, prescription, or
model, if it is not;
***
(9) That the supplier has a sponsorship, approval, or
affiliation that the supplier does not have . . . .30
In addition, the Ohio statute expressly states that courts are to “give
due consideration and great weight to federal trade commission orders, trade
regulation rules and guides, and the federal courts’ interpretations of
26
16 C.F.R. § 255.1.
FTC, supra note 14, at 3.
A number of states have modeled statutes on the Federal Trade Commission Act. See, e.g.,
California Unfair Competition Act, CAL. BUS. & PROF. CODE. § 17200 (West 2008); Connecticut Unfair
Trade Practices Act, CONN. GEN. STAT. § 42-110b (2007); Florida Deceptive and Unfair Trade Practices
Act, FLA. STAT. § 501.204 (2009); Georgia Fair Business Practices Act, GA. CODE ANN. § 10-1-391
(2003); Hawaii's Antitrust and Consumer Protection Laws, HAW. REV. STAT. § 480-2 (2008); Louisiana
Unfair Trade Practices and Consumer Protection Law, LA. REV. STAT. ANN. §§ 51:1401-1426 (2003);
Maine Unfair Trade Practices Act, ME. REV. STAT. tit. 5, §§ 207-214 (2002); Massachusetts Consumer
Protection Act, MASS. GEN. LAWS ch. 93A § 2 (2006); Montana Unfair Trade Practices and Consumer
Protection Act, MONT. CODE ANN. §§ 30-14-103 to -104 (2009); Nebraska Consumer Protection Act,
NEB. REV. STAT. §§ 59-1601 to -1623 (2004); New York Consumer Protection Act, N.Y. GEN. BUS.
LAW § 349 (McKinney 2004); North Carolina Monopolies, Trusts and Consumer Protection Act, N.C.
GEN. STAT. § 75-1.1 (2000); Ohio Consumer Sales Practices Act, OHIO REV. CODE ANN. § 1345.02
(LexisNexis 2004); Rhode Island Deceptive Trade Practices Act, R.I. GEN. LAWS §§ 6-13.1-2 to .1-3
(2006); South Carolina Unfair Trade Practices Act, S.C. CODE ANN. § 39-5-20 (1985); Vermont
Consumer Fraud Statute, VT. STAT. ANN. tit. 9, §§ 2451-2453 (2007); Washington Consumer Protection
Act, WASH. REV. CODE § 19.86.920 (1999).
29
OHIO REV. CODE ANN. § 1345.02.
30
Id. §§ 1345.02(B)(1)-(2), (9).
27
28
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subsection 45 (a)(1) of the ‘Federal Trade Commission Act,’ 38 Stat. 717
(1914), 15 U.S.C.A. 41, as amended.”31
Some states have enacted even more aggressive legislation that is
aimed to prohibit false advertising. For example, section 17200 of the
California Business and Professions Code addresses false advertising in the
context of unfair competition and states: “[a]s used in this chapter, unfair
competition shall mean and include any unlawful, unfair or fraudulent
business act or practice and unfair, deceptive, untrue or misleading
advertising . . . .”32 Section 17500 of this same Code addresses false
advertising and states:
It is unlawful for any person, firm, corporation or
association, or any employee thereof with intent directly or
indirectly to dispose of real or personal property . . . to
make or disseminate or cause to be made or disseminated
before the public in this state, or to make or disseminate or
cause to be made or disseminated from this state before the
public in any state, in any newspaper or other publication,
or any advertising device, or by public outcry or
proclamation, or in any other manner or means whatever,
. . . any statement, concerning that real or personal property
. . . or concerning any circumstance or matter of fact
connected with the proposed . . . disposition thereof, which
is untrue or misleading, and which is known, or which by
the exercise of reasonable care should be known, to be
untrue or misleading . . . .33
Until the passage of Proposition 64 in 2004, individuals or groups that never
suffered any loss or harm could file a lawsuit under section 17200 on behalf
of the “general public” without satisfying traditional class action
requirements.34 Additionally, the statute’s pleading requirements and
31
Id. § 1345.02(C).
CAL. BUS. & PROF. CODE § 17200.
Id. § 17500.
34
CAL. BUS. & PROF. CODE § 17204 (West 1997) (current version at CAL. BUS. & PROF. CODE §
17204 (West 2008)) (“Actions for any relief [under the UCL would be] prosecuted . . . by the Attorney
General or any district attorney or by any county counsel . . . [or] by a city prosecutor . . . [or] by a city
attorney . . . or upon the complaint of any board, officer, person, corporation or association or by any
person acting for the interests of itself, its members or the general public.”). Proposition 64 was passed
by referendum in November 2004, and now requires that the plaintiff to show standing by proving that he
or she has suffered an actual injury and has lost money or property as a result of such unfair competition
or false advertising. CAL. BUS. & PROF. CODE §§ 17203-17204 (as amended by Proposition 64). The
California Supreme Court has recently held that only the representative plaintiff in a class action must
meet the Proposition 64 standing requirements. In re Tobacco II Cases, 207 P.3d 20, 25 (Cal. 2009). The
court focused on the use of the terms “person” and “claimant” in the statute, and found that by using the
singular forms, the drafters indicated that only the representative plaintiff in a class action must establish
standing under Proposition 64. Id. at 32. The court further expressed the view that traditional class action
standing requirements, which do not require absent class members to establish standing, and the
32
33
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
73
standards of proof were very liberal and allowed recovery, sometimes on a
representative basis, upon a determination that the challenged conduct was
“unfair” or “likely to deceive a reasonable consumer” without any proof of
actual injury.35
Social media marketing campaigns or strategies must comply with
these laws and regulations. As a starting point, advertisers must ensure that
all marketing claims (even sponsored or encouraged social media marketing
claims) are truthful and accurate. If advertisers are using social media
advertising strategies where their customers are encouraged to convey the
advertising claims, then the advertisers must still ensure that they have
adequate and reliable substantiation before the claims are disseminated by
the customers to other potential customers. Moreover, the advertiser must
make attempts to ensure that social media marketing claims convey all
relevant information to the customer and avoid conveying any implicitly
false statements. Advertisers must make attempts to ensure that advertising
claims are conveyed in such a way as to clearly and conspicuously disclose
all material information regarding the claim in the advertisement.
In addition, when third parties (like advertising agencies and
websites) are conveying advertising claims from other parties, the third
parties should also independently review the substantiation for the
advertising claims to confirm that the advertising presented is true and
accurate. To illustrate the potential for third-party liability, a recent class
action lawsuit was filed in federal court against Zynga Game Network, Inc.
and Facebook alleging that Zynga disseminated false and misleading
advertising through the third-party advertising offered through games that
Zynga offered on Facebook.36 The lead plaintiff, Rebecca Swift, alleged
that Zynga falsely advertised “free” offers in exchange for “YoCash” that
could be used in Zynga’s “YoVille” virtual world. Even though Zynga’s ad
offers were provided by third parties (and not by Zynga or Facebook), the
suit claimed that both Zynga and Facebook were liable because they
knowingly displayed the fraudulent offers.37 While Facebook has been
dismissed from the lawsuit, the case against Zynga continues with Zynga
arguing that the company is protected by the Communications Decency
reasoning for passing Proposition 64, preventing “shakedown” suits by private citizens unaffected by the
defendant’s actions, supported its holding. Id. at 332, 334-36.
35
See supra note 34. Importantly, a defendant’s knowledge of the falsity of the advertisement is not
an element of a Section 17200 or a Section 17500 claim, as California's UCL prohibits both negligent
and intentional dissemination of misleading advertising. Feather River Trailer Sales, Inc. v. Sillas, 158
Cal. Rptr. 26, 34 (Cal. Ct. App. 1979); Khan v. Med. Bd. of Cal., 16 Cal. Rptr. 2d 385, 392 (Cal. Ct.
App. 1993); People v. Forest E. Olson, Inc., 186 Cal. Rptr. 804, 806 (Cal. Ct. App. 1982); Schnall v.
Hertz Corp., 93 Cal. Rptr. 2d 439, 457 (Cal. Ct. App. 2000) (“unlike common law fraud,” under the UCL
“it is only necessary to show that members of the public are likely to be deceived”).
36
Class Action Complaint and Jury Trial Demand, Swift v. Zynga Game Network, Inc., No. 3:2009CV-05443 (N.D. Cal. Nov. 17, 2009).
37
Id. ¶¶ 18-23 (describing advertising campaign and the revenue made by Zynga and Facebook from
this advertising).
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Act.38
B. False Advertising Under the Lanham Act
While the FTC Act and state consumer protection statutes provide
several means by which an advertiser could face liability from a customer
for false or misleading advertising, competitor litigation under the Lanham
Act could also arise from false or misleading advertising claims distributed
through social media marketing campaigns.39 Section 43(a) of the Lanham
Act provides, in relevant part, that “[a]ny person who . . . uses in commerce
any . . . false or misleading description of fact, or false or misleading
representation of fact, which—in commercial advertising or promotion,
misrepresents the nature, characteristics, qualities, or geographic origin of
. . . another person’s goods, services, or commercial activities, shall be liable
in a civil action . . . .”40
Section 43(a) “creates a cause of action for false or misleading
advertisement.”41 To establish a claim under the Lanham Act under section
43(a), a plaintiff must establish that: (1) defendant made a false or
misleading statement of fact in advertising; (2) the statement actually
deceived or had the capacity to deceive a substantial segment of the
audience; (3) the deception was material, in that it was likely to influence
the purchasing decision; (4) defendant caused the false statement to enter
interstate commerce; and (5) plaintiff has been or is likely to be injured as a
result.42
Many states have statutes or other false advertising laws that are
modeled after the Lanham Act.43 For example, the Ohio Deceptive Trade
38
Notice of Dismissal of Facebook, Inc. Without Prejudice, Swift v. Zynga Game Network, Inc.,
No. CV 09-5443 SBA (N.D. Cal. Jan. 22, 2010).
39
At least one court has held that “commercial advertising or promotion” includes advertising
claims made in methods and means beyond those typically used in the traditional mass media advertising
campaign. See, e.g., Procter & Gamble Co. v. Haugen, 222 F.3d 1262, 1275-76 (10th Cir. 2000) (holding
that an email message could constitute commercial advertising or promotion).
40
15 U.S.C. § 1125(a)(1)(B) (2006).
41
Iams Co. v. Nutro Prods., Inc., No. 3:00-cv-566, 2004 U.S. Dist. LEXIS 15134, at *8 (S.D. Ohio
July 3, 2004).
42
United Indus. Corp. v. Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998).
43
See, e.g., Deceptive Trade Practices Act, ALA. CODE §§ 8-19-1 to -15 (2002); Deceptive Trade
Practices Act, ARK. CODE ANN. §§ 4-88-101 to -207 (2004); Consumer Protection Act, COLO. REV.
STAT. §§ 6-1-101 to -114 (2002); Uniform Deceptive Trade Practices Act, DEL. CODE ANN. tit. 6, §§
2531-2537 (2006); Uniform Deceptive Trade Practices Act, GA. CODE ANN. §§ 10-1-370 to -375 (2003);
Uniform Deceptive Trade Practice Act, HAW. REV. STAT. §§ 481A-1 to -5 (2008); Uniform Deceptive
Trade Practices Act, 815 ILL. COMP. STAT. §§ 510/1 to /7 (2008); Uniform Deceptive Trade Practices
Act, ME. REV. STAT. tit. 10, §§ 1211-1216 (2009); Uniform Trade Practices Act, MINN. STAT. §§
325D.43-.48 (2004); Uniform Deceptive Trade Practices Act, NEB. REV. STAT. §§ 87-301 to -306 (2008);
Unfair Practices Act, N.M. STAT. ANN. §§ 57-12-1 to -22 (2003); Deceptive Trade Practices Act, OHIO
REV. CODE ANN. §§ 4165.01-.04 (LexisNexis 2007); Deceptive Trade Practices Act, OKLA. STAT. tit. 78,
§§ 51-55 (2002); Unlawful Trade Practices, OR. REV. STAT. tit. 50, §§ 646.605-.656 (2009); Unfair
Trade Practice and Consumer Protection Act, R.I. GEN. LAWS §§ 6-13.1-1 to -9 (2006); Deceptive Trade
Practices and Consumer Protection Act, TEX. BUS. & COM. CODE ANN. §§ 17.41-.826 (West 2002).
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Practices Act44 prohibits false advertising and provides that:
A person engages in a deceptive trade practice when, in the
course of the person’s business, vocation, or occupation, the
person does any of the following:
(1) Passes off goods or services as those of another;
(2) Causes likelihood of confusion or
misunderstanding as to the source, sponsorship,
approval, or certification of goods or services;
(3) Causes likelihood of confusion or
misunderstanding as to affiliation, connection, or
association with, or certification by, another;
(4) Uses deceptive representations or designations
of geographic origin in connection with goods or
services;
***
(7) Represents that goods or services have
sponsorship, approval, characteristics, ingredients,
uses, benefits, or quantities that they do not have or
that a person has a sponsorship, approval, status,
affiliation, or connection that the person does not
have;
(8) Represents that goods are original or new if they
are deteriorated, altered, reconditioned, reclaimed,
used, or secondhand;
(9) Represents that goods or services are of a
particular standard, quality, or grade, or that goods
are of a particular style or model, if they are of
another;
(10) Disparages the goods, services, or business of
another by false representation of fact;
***
(12) Makes false statements of fact concerning the
reasons for, existence of, or amounts of price
reductions . . . .45
To some extent, mini-Lanham Act statutes like the Ohio Deceptive Trade
44
45
OHIO REV. CODE ANN. §§ 4165.01-.04.
Id. § 4165.02(A).
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Practices Act provide more risk to advertisers because a private cause of
action may be brought by persons and there is no requirement that the
person be a competitor. For example, a private cause of action can be
brought under the Ohio Deceptive Trade Practices Act by any “person,”
which includes individuals and commercial entities.46
There has already been some Lanham Act litigation related to social
media or user-generated content marketing campaigns. In Doctor’s Assocs.,
Inc. v. QIP Holders, LLC, the operators of the Subway sandwich chain sued
the operators of the Quiznos sandwich chain over certain user-generated
advertisements. Quiznos (and the video-sharing site iFilm) sponsored a
nationwide contest called “Quiznos v. Subway TV Ad Challenge,” whereby
Quiznos encouraged contestants to submit videos comparing Quiznos
sandwiches to Subway sandwiches using the theme “meat, no meat.”47 The
contestants
submitted
their
videos
to
a
website
called
48
www.meatnomeat.com and iFilm published the entries on its website. The
contestant-created videos remained on the iFilm website after the end of the
contest and the selection of the winner.49 Taking issue with several of the
contestant-created videos, Subway filed suit against QIP Holders, LLC
(Quiznos and iFilm) in federal court in Connecticut alleging, among other
things, that the contestant-created entries contained false and misleading
advertising in violation of the Lanham Act.50
Quiznos moved for summary judgment on the Lanham Act claim
asserting that it had immunity for publication of user-generated content
found in the Communications Decency Act, which is codified in 47 U.S.C.
section 230(c).51 In denying Quiznos’ motion, the court explained that
Quiznos could be found to have actively participated in the creation or
development of the submitted contestant-created content.52 If such a finding
46
Id. § 4165.03(A)(2); Bower v. IBM, 495 F. Supp. 2d 837, 843 (S.D. Ohio 2007) (holding the
consumers and the class that they purported to represent were individuals, and the Ohio Deceptive Trade
Practices Act by its plain language placed no limitation on the type of individuals who were considered
to be a “person” who could pursue a claim).
47
Doctor’s Assocs., Inc. v. QIP Holder LLC, No. 3:06-cv-1710 (VLB), 2010 U.S. Dist. LEXIS
14687, at *17 (D. Conn. Feb. 19, 2010).
48
Id. at *3.
49
Id. at *18-21.
50
Id. at *1.
51
Quiznos made the same argument in a motion to dismiss. The court denied the motion, holding
that the Communications Decency Act provides defendants an affirmative defense, which can be raised
on a motion for summary judgment, but not on a motion to dismiss. Doctor’s Assocs. Inc. v. QIP
Holders, LLP, No. 3:06-cv-1710 (JCH), 2007 U.S. Dist. LEXIS 28811, at *1-5 (D. Conn. Apr. 18, 2007).
52
Doctor’s Assocs., Inc., 2010 U.S. Dist. LEXIS 14687, at *68-71.
The distinction between merely publishing information provided by a third-party
as an interactive computer service and actually creating or developing any of the
information posted as an information content provider is critical. That distinction
determines whether the CDA provides immunity to a provider or user of an
interactive computer service.
Id. at *68 (citing MCW v. Badbusinessbureau.com, No. 3:02-cv-2727-G, 2004 U.S. Dist. LEXIS 6678, at
*23-24 (N.D. Tex. Apr. 19, 2004).
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
77
was made or evidence supporting such involvement was shown, then
immunity under the Communications Decency Act would not exist and
Quiznos could be found liable under the Lanham Act for false advertising.
More specifically, the court stated that the following facts could weigh in
favor of destroying immunity:
(1) Quiznos expressly invited contestants to submit
contestant-created videos proclaiming that Quiznos
is better than Subway;
(2) the domain name “meatnomeat.com” is
arguably a literal falsity because it implies that
Subway sandwiches contain no meat; and
(3) the four sample videos created by Quiznos to
shape the contestant-created entries may contain
false claims implying that Subway sandwiches have
no meat or less meat than Quiznos sandwiches.53
The case settled shortly after the court denied Quiznos’ motion for
summary judgment. While the settlement prevented further development of
the law relating to false advertising claims and user-generated marketing
messages, the case (and the settlement) does demonstrate that advertisers
could face litigation from competitors under the Lanham Act if false or
misleading advertising claims are distributed through social media
marketing campaigns.
III. FTC GUIDELINES CONCERNING THE USE OF ENDORSEMENTS AND
TESTIMONIALS IN ADVERTISING
The FTC has recently made it clear that it views the social media
marketing strategies to be like other marketing strategies. In late 2007, the
FTC began reviewing its Endorsements and Testimonials Guidelines to
address endorsements by consumers, experts, organizations, and celebrities,
as well as the disclosure of important connections between advertisers and
endorsers.54 The Endorsements and Testimonials Guidelines (which had not
been revised by the FTC since 1980) went into effect on December 1, 2009.
The Endorsements and Testimonials Guidelines (like other
guidelines issued by the FTC) are not law; rather, these guidelines
“represent administrative interpretations of laws enforced by the Federal
Trade Commission for the guidance of the public in conducting its affairs in
53
Id. at *70.
Guides Concerning Use of Endorsements and Testimonials in Advertising, 16 C.F.R. § 255.0
(2010). In January 2007, the FTC published a Federal Register notice seeking comment on “the overall
costs, benefits, and regulatory and economic impact of its Guides.” Endorsements and Testimonials
Guidelines, Request for Public Comments, 72 Fed. Reg. 2214 (proposed Jan. 18, 2007) (to be codified at
16 C.F.R. pt. 255).
54
78
UNIVERSITY OF DAYTON LAW REVIEW
conformity with legal requirements.”55
following description of the Guidelines:
[Vol. 36:1
In addition, the FTC gives the
[t]he Guides provide the basis for voluntary compliance
with the law by advertisers and endorsers. Practices
inconsistent with these Guides may result in corrective
action by the Commission under Section 5 if, after
investigation, the Commission has reason to believe that the
practices fall within the scope of conduct declared unlawful
by the statute.56
The Endorsements and Testimonials Guidelines cover only those
messages which are “sponsored” messages—endorsements or testimonials
that are paid for or solicited directly or indirectly by the advertiser.57 The
guidelines cover advertising messages that consumers are likely to believe
reflect the personal opinion or experience of a person or organization.58 The
FTC’s concern appears to be that when customers (or other endorsers) are
speaking for marketers, the audience does not know it is an advertising
message.
The examples provided by the FTC in the guidelines make clear that
the FTC views the social media marketing strategies to be like other
marketing strategies. For instance, in example eight of section 255.0, the
FTC provides the following illustration:
A consumer who regularly purchases a particular brand of
dog food decides one day to purchase a new, more
expensive brand made by the same manufacturer. She
writes in her personal blog that the change in diet has made
her dog’s fur noticeably softer and shinier, and that in her
opinion, the new food definitely is worth the extra money.
This posting would not be deemed an endorsement under
the Guides.
Assume that rather than purchase the dog food with her own
money, the consumer gets it for free because the store
routinely tracks her purchases and its computer has
generated a coupon for a free trial bag of this new brand.
55
16 C.F.R. § 255.0(a) (“Specifically, the Guides address the application of Section 5 of the FTC
Act (15 U.S.C. 45) to the use of endorsements and testimonials in advertising.”).
56
Id.
57
Id. § 255.0(b) (“For purposes of this part, an endorsement means any advertising message
(including verbal statements, demonstrations, or depictions of the name, signature, likeness or other
identifying personal characteristics of an individual or the name or seal of an organization) that
consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other
than the sponsoring advertiser, even if the views expressed by that party are identical to those of the
sponsoring advertiser.”).
58
Id. Stated another way, the Guidelines cover advertising claims that could be viewed or perceived
to be statements of the personal views of the speaker.
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
79
Again, her posting would not be deemed an endorsement
under the Guides.
Assume now that the consumer joins a network marketing
program under which she periodically receives various
products about which she can write reviews if she wants to
do so. If she receives a free bag of the new dog food
through this program, her positive review would be
considered an endorsement under the Guides.59
The FTC’s citation of the “personal blog” in the above example evidences
an apparent view that it expects that advertisers or marketers will comply
with the law when the advertiser employs social media marketing strategies.
The guidelines (like other advertising laws and regulations) prohibit
deceptive or unsubstantiated representations.60 The guidelines require that
endorsements “reflect the honest opinions, findings, beliefs, or experience of
the endorser” and “may not convey any . . . [claim] that would be deceptive
if made directly by the advertiser.”61 The guidelines also limit the ability of
advertisers or marketers from taking the statements of endorsers and
presenting those statements out of context.62 The FTC states that, “[t]he
endorsement message need not be phrased in the exact words of the
endorser, unless the advertisement affirmatively so represents. However,
the endorsement may not be presented out of context or reworded so as to
distort in any way the endorser’s opinion or experience with the product.”63
The guidelines also state that:
[w]hen the advertisement represents that the endorser uses
the endorsed product, the endorser must have been a bona
fide user of it at the time the endorsement was given.
Additionally, the advertiser may continue to run the
advertisement only so long as it has good reason to believe
that the endorser remains a bona fide user of the product.64
Again, the FTC makes clear in the guidelines that the rules apply to
social media advertising. In example five of section 255(1), the FTC
provides the following illustration:
59
Id. § 255.0 (Ex. 8) (emphasis added).
Id. § 255.2(a) (“An advertisement employing endorsements by one or more consumers about the
performance of an advertised product or service will be interpreted as representing that the product or
service is effective for the purpose depicted in the advertisement. Therefore, the advertiser must possess
and rely upon adequate substantiation, including, when appropriate, competent and reliable scientific
evidence, to support such claims made through endorsements in the same manner the advertiser would be
required to do if it had made the representation directly, i.e., without using endorsements.”).
61
Id. § 255.1(a).
62
Id. § 255.1(b).
63
Id.
64
Id. § 255.1(c).
60
80
UNIVERSITY OF DAYTON LAW REVIEW
[Vol. 36:1
A skin care products advertiser participates in a blog
advertising service. The service matches up advertisers
with bloggers who will promote the advertiser’s products on
their personal blogs. The advertiser requests that a blogger
try a new body lotion and write a review of the product on
her blog. Although the advertiser does not make any
specific claims about the lotion’s ability to cure skin
conditions and the blogger does not ask the advertiser
whether there is substantiation for the claim, in her review
the blogger writes that the lotion cures eczema and
recommends the product to her blog readers who suffer
from this condition. The advertiser is subject to liability for
misleading or unsubstantiated representations made through
the blogger’s endorsement. The blogger also is subject to
liability for misleading or unsubstantiated representations
made in the course of her endorsement. The blogger is also
liable if she fails to disclose clearly and conspicuously that
she is being paid for her services.65
Likely recognizing the expected reaction and concerns from advertisers
about becoming liable for statements being made by third parties,66 many of
65
66
Id. § 255.1 (Ex. 5).
The FTC did receive numerous comments on Example five and responded by stating:
The [FTC] recognizes that because the advertiser does not disseminate the
endorsement made using these new consumer-generated media, it does not have
complete control over the contents of those statements. Nonetheless, if the
advertiser initiated the process that led to these endorsements being made—e.g.,
by providing products to well-known bloggers or to endorsers enrolled in word of
mouth marketing programs—it potentially is liable for misleading statements made
by those consumers.
Imposing liability in these circumstances hinges on the determination that the
advertiser chose to sponsor the consumer-generated content such that it has
established an endorser-sponsor relationship. It is foreseeable that an endorser
may exaggerate the benefits of a free product or fail to disclose a material
relationship where one exists. In employing this means of marketing, the
advertiser has assumed the risk that an endorser may fail to disclose a material
connection or misrepresent a product, and the potential liability that accompanies
that risk. The [FTC], however in the exercise of its prosecutorial discretion, would
consider the advertiser's efforts to advise these endorsers of their responsibilities
and to monitor their online behavior in determining what action, if any, would be
warranted.
New Example 5 should not be read to suggest that an advertiser is liable for any
statement about its product made by any blogger, regardless of whether there is
any relationship between the two. However, when the advertiser hires a blog
advertising agency for the purpose of promoting its products -- as posited by the
specific facts set forth in this example -- the [FTC] believes it is reasonable to hold
the advertiser responsible for communicating approved claims to the service
(which, in turn, would be responsible for communicating those claims to the
blogger). The commenters expressing concern that the blogger in new Example 5
potentially could be liable for giving her honest opinion of the product (that it
cures eczema) and discussing her personal experience with it appear to have
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
81
whom (if not most of whom) the advertiser has little to no control over, the
FTC added:
In order to limit its potential liability, the advertiser should
ensure that the advertising service provides guidance and
training to its bloggers concerning the need to ensure that
statements they make are truthful and substantiated. The
advertiser should also monitor bloggers who are being paid
to promote its products and take steps necessary to halt the
continued publication of deceptive representations when
they are discovered.67
Advertisers using social media marketing strategies (and the bloggers
communicating those social media advertising messages) must ensure that
statements made are true and non-misleading (even if the statements were
not made directly by the advertiser).
Importantly (at least in the context of social media marketing), the
guidelines have a much broader definition of “sponsored advertising” and
have more restrictive requirements relating to the disclosure of any
“material connections” that the user may have with the producer of any
product.68 The guidelines state that “[w]hen there exists a connection
between the endorser and the seller of the advertised product that might
materially affect the weight or credibility of the endorsement (i.e., the
connection is not reasonably expected by the audience), such connection
must be fully disclosed.”69
The revised guidelines provide several examples and illustrations to
show that the FTC is applying a broader interpretation of “sponsored
advertising” where advertisers need to disclose “material connections”
(payments or free products) between the advertiser and the endorsers.70 The
examples provided by the FTC in the guidelines make clear that the FTC
would find Twitter and Facebook statements to be advertising.71 In example
misread the example. The blogger did not either give her opinion about subjective
product characteristics (e.g., that she liked the fragrance) or relate her own
experience with it (the example does not say that she had eczema). Rather, she
made a blanket claim that the product 'cures' eczema without having any
substantiation for that claim. The [FTC] is revising new Example 5, however, to
clarify that both the advertiser and the blogger are subject to liability for
misleading or unsubstantiated representations made in the course of the blogger's
endorsement.
Guides Concerning the Use of Endorsements and Testimonials in Advertising, 74 Fed. Reg. 53124,
53127 (Oct. 15, 2009) (to be codified at 16 C.F.R. pt. 255) (alteration in original text).
67
16 C.F.R. § 255.1 (Ex. 5).
68
Id. § 255.5.
69
Id.
70
Id.
71
Given the nature of social media websites like Twitter (where only 140 characters are permitted
for each Tweet), disclosure is difficult, if not impossible. The FTC recognizes this issue and in response,
has confirmed that “the same general principle—that people have the information they need to evaluate
82
UNIVERSITY OF DAYTON LAW REVIEW
[Vol. 36:1
three of section 255.5, the FTC states:
During an appearance by a well-known professional tennis
player on a television talk show, the host comments that the
past few months have been the best of her career and during
this time she has risen to her highest level ever in the
rankings. She responds by attributing the improvement in
her game to the fact that she is seeing the ball better than
she used to, ever since having laser vision correction
surgery at a clinic that she identifies by name. She
continues talking about the ease of the procedure, the
kindness of the clinic's doctors, her speedy recovery, and
how she can now engage in a variety of activities without
glasses, including driving at night. The athlete does not
disclose that, even though she does not appear in
commercials for the clinic, she has a contractual
relationship with it, and her contract pays her for speaking
publicly about her surgery when she can do so. Consumers
might not realize that a celebrity discussing a medical
procedure in a television interview has been paid for doing
so, and knowledge of such payments would likely affect the
weight or credibility consumers give to the celebrity's
endorsement. Without a clear and conspicuous disclosure
that the athlete has been engaged as a spokesperson for the
clinic, this endorsement is likely to be deceptive.
Furthermore, if consumers are likely to take away from her
story that her experience was typical of those who undergo
the same procedure at the clinic, the advertiser must have
substantiation for that claim.
Assume that instead of speaking about the clinic in a
television interview, the tennis player touts the results of her
surgery—mentioning the clinic by name—on a social
networking site that allows her fans to read in real time
what is happening in her life. Given the nature of the
medium in which her endorsement is disseminated,
consumers might not realize that she is a paid endorser.
Because that information might affect the weight consumers
give to her endorsement, her relationship with the clinic
sponsored statements—applies across the board, regardless of the advertising medium.” FTC Fact’s for
Business, The FTC's Revised Endorsement Guides: What People are Asking, FTC.GOV,
http://www.ftc.gov/bcp/edu/pubs/business/adv/bus71.shtm (last visited Nov. 19, 2010). While the FTC
isn’t recommending any specific wording in a tweet, the FTC did state that “[a] hashtag like ‘#paid ad’
uses only 8 characters. Shorter hashtags—like ‘#paid’ and ‘#ad’—also might be effective.” Id.
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
83
should be disclosed.72
The FTC has also made clear that the guidelines apply to user-generated
content. In example seven of section 255.5, the FTC states:
A college student who has earned a reputation as a video
game expert maintains a personal weblog or ‘blog’ where
he posts entries about his gaming experiences. Readers of
his blog frequently seek his opinions about video game
hardware and software. As it has done in the past, the
manufacturer of a newly released video game system sends
the student a free copy of the system and asks him to write
about it on his blog. He tests the new gaming system and
writes a favorable review.
Because his review is
disseminated via a form of consumer-generated media in
which his relationship to the advertiser is not inherently
obvious, readers are unlikely to know that he has received
the video game system free of charge in exchange for his
review of the product, and given the value of the video
game system, this fact likely would materially affect the
credibility they attach to his endorsement. Accordingly, the
blogger should clearly and conspicuously disclose that he
received the gaming system free of charge.
The
manufacturer should advise him at the time it provides the
gaming system that this connection should be disclosed, and
it should have procedures in place to try to monitor his
postings for compliance.73
The FTC also makes clear that the guidelines apply to less formal
communications, like on-line message board communications. In example
eight of section 255.5, the FTC states:
An online message board designated for discussions of new
music download technology is frequented by MP3 player
enthusiasts.
They exchange information about new
products, utilities, and the functionality of numerous
playback devices. Unbeknownst to the message board
community, an employee of a leading playback device
manufacturer has been posting messages on the discussion
board promoting the manufacturer's product. Knowledge of
this poster's employment likely would affect the weight or
credibility of her endorsement. Therefore, the poster should
clearly and conspicuously disclose her relationship to the
manufacturer to members and readers of the message
72
73
16 C.F.R. § 255.5 (Ex. 3) (emphasis added).
Id. § 255.5 (Ex. 7) (emphasis added).
84
UNIVERSITY OF DAYTON LAW REVIEW
[Vol. 36:1
board.74
There are several key messages that can be taken away from the
Endorsements and Testimonials Guidelines, including:
74
75
76
77
78
79
80
81
(1)
The definition of endorsement is very broad and can
include “[(a)] verbal statements, [(b)] demonstrations, or
[(c)] depictions of the name, signature, likeness or other
identifying personal characteristics of an individual or
[(d)] the name or seal of an organization;”75
(2)
“Endorsements must reflect the honest opinions,
findings, beliefs, or experiences of the endorser;”76
(3)
Endorsers “may not convey any express or implied
representation that would be deceptive if made
directly by the advertiser;”77
(4)
“Advertisers are subject to liability for false or
unsubstantiated
statements
made
through
endorsements, or for failing to disclose material
connections between themselves and their
endorsers;”78
(5)
“Endorsers also may be liable for [false or
misleading] statements made in the course of their
endorsement;”79
(6)
Disclosure of any “material connections” between
the advertiser/seller and its endorser is required;80
(7)
A “material connection” is information that could
impact the weight or credibility a consumer gives
to the endorsement;81
(8)
A “material connection” could be consideration
given to a speaker or blogger by an advertiser in the
form of benefits or incentives (e.g., cash, free
products, prizes, and special access privileges);
(9)
A “material connection” could be the relationship
between the advertiser and speaker (e.g.,
Id. § 255.5 (Ex. 8) (emphasis added).
Id. § 255.0(b).
Id. § 255.1(a).
Id.
Id. § 255.1(d).
Id.
Id. § 255.5.
Id.
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EXPLORING THE LEGAL PITFALLS OF USER-GENERATED CONTENT
85
employment);82 and
(10)
Disclosure must be clear and conspicuous and
language should be easily understood and
unambiguous.83
As a best practice, a marketer should create a culture of compliance
by educating all external advertisers (including bloggers) and the
advertisers’ employees of the advertiser about their responsibilities (or
product being advertised). Marketers should require that all external
advertisers (including bloggers) provide the required disclosure of all
“material connections.”84 For example, if a marketer provides free products
to an external advertiser in the hope of obtaining a positive review, then the
marketer should instruct the external advertiser to disclose that the product
was provided to them by the company for providing the review.85 The
marketer should also monitor all marketing claims (including those made by
external advertisers) to make sure that all material disclosures are being
provided, and the marketer should remind the external advertisers if there is
a lack of disclosure.86
Given that the Endorsements and Testimonials Guidelines state that
the endorser could be liable (with the advertiser) for conveying false and
misleading messages, all external advertisers (including bloggers) should
confirm the understanding of responsibilities with any marketer before
engaging in any advertising.87 The external advertisers should disclose all
material connections when conveying any advertising message, regardless
of the platform used to convey the message.88 The external advertisers
should also work proactively with the marketer to demonstrate compliance
with the law.89 While disclosures need to be “clear and conspicuous,” the
disclosure does not need to be extensive.90
IV. CONCLUSION
Because of the viral nature of social media, advertisers (and
attorneys reviewing advertising “copy” and marketing strategies) must be
82
Id.
Id. Placement must be easily viewed and appear in a readable and noticeable font size/color. FED.
TRADE COMM’N, ADVERTISING PRACTICES FREQUENTLY ASKED QUESTIONS: ANSWERS FOR SMALL
BUSINESS 11 (2001), available at http://www.ftc.gov/bcp/edu/pubs/business/adv/bus35.pdf.
84
16 C.F.R. § 255.1 (Ex. 5).
85
Id.
86
Id.
87
Id.
88
Id. § 255.5.
89
Id. § 255.1 (Ex. 5).
90
See id. § 255.5. For example, the external advertisers could satisfy disclosure obligations by
simply stating that “I received (product or sample) from (company name),” “(company name) sent me
(product or name),” “I was paid by (company name),” or “I am an employee or representative of
(company name)” before making any advertising statement.
83
86
UNIVERSITY OF DAYTON LAW REVIEW
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even more vigilant to ensure that marketers behind advertising campaigns
(especially social media marketing campaigns) consider advertising laws
and regulations and do not run afoul of these laws. While attempts to
overlay existing advertising laws and regulations can be difficult (and in
some cases impossible), advertisers must be cognizant of the legal issues.
Advertisers must incorporate existing and newly-created laws and
regulations (and the lessons learned by other social media marketers) into
their advertising campaigns. Ignoring the legal issues and lessons is fraught
with peril and can cause severe adverse consequences to both the advertiser
and brand being advertised.91
91
Highlighting the increased scrutiny of social media marketing strategies, the FTC recently
completed its first investigation under the “Endorsements and Testimonials Guides.” To promote the
launch of its summer collection, Ann Taylor LOFT invited bloggers to attend an exclusive preview of its
2010 summer collection and were told they would receive a special gift. Letter from Mary K. Engle,
Associate Director, Federal Trade Commission, to Kenneth A. Plevan, Esq., Skadden, Arps, Slate,
Meagher & Flom LLP (Apr. 20, 2010), available at http://www.adlawbyrequest.com/uploads/file/100420
anntaylorclosingletter%5B1%5D.pdf. Furthermore, Ann Taylor told bloggers that those who post
coverage from the event will be entered in a mystery gift card drawing where you can win up to $500 at
LOFT! Id. The FTC stated that “[w]e were concerned that bloggers who attended a preview on January
26, 2010 failed to disclose that they received gifts for posting blog content about that event.” Id.
According to the letter, the FTC decided “not to recommend enforcement action at this time” and based
its decision on several factors, including the fact that (1) the event was the first and only preview event to
date, (2) only a small number of bloggers participated (and some disclosed the material connection), (3) a
sign was posted at the preview informing bloggers that they should disclose the gifts, and (4) Ann Taylor
subsequently adopted a written policy regarding blogger outreach and advertising. Id. Although the FTC
ultimately took no action against Ann Taylor (or the bloggers who covered the event), it is clear that the
FTC is scrutinizing social media advertising campaigns to ensure compliance with the Endorsement and
Testimonial Guides.